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Updated on Thursday, April 2, 2015
Avant and LendUp are two companies aimed at helping consumers gain access to credit. Each company wants to improve the online lending industry in a way that helps customers. They both offer a simple application process to make it easier for borrowers to get the money they need, and they’re both transparent about the process.
However, they’re structured very differently. Avant* offers access to personal loans in the form of actual installment loans, whereas LendUp offers a slightly better version of a predatory payday loan.
Avant is trying to bridge the gap between consumers needing to resort to payday loans because they lack the credit to qualify for a personal loan. In Avant’s own words, its personal loans are for “when you need a repayment option that extends beyond your next payday.”
Let’s take a look at the similarities and differences between the two, and which one might be right for you.
Avant and LendUp Are Filling a Void
Both Avant and LendUp are offering alternatives to borrowers in each provider’s respective industries – personal loans and payday loans.
LendUp does this by offering its loans to those with damaged or nonexistent credit. It also provides educational incentives for consumers to get better terms on their loans with their “LendUp Ladder” program.
Customers can earn points by watching educational videos on credit, and these points advance them up the ladder to different statuses. Each status offers access to more money at lower rates, and for longer periods of time.
The Avant platform similarly loans to people with lower credit scores. Neither company focuses solely on your credit score – instead, each takes into account your financial situation, your income, your employment history, and your loan repayment history.
If you don’t have the best credit score, which lending option should you choose? With very few exceptions, you should always apply through Avant first as it offers the better deal. If you’re declined through Avant, you can turn to LendUp.
The Biggest Difference is the Terms Offered
Because LendUp is a payday loan alternative, its terms are extremely short – from 7 days to 31 days. Avant offers much longer terms – 24 to 60 months.
Additionally, since LendUp is focused on shorter loan terms, it also has lower loan amounts – from $100 to $250. Avant offers access to loans from $2,000 to $35,000 (with the minimum varying from state to state).
The biggest difference? The APR. LendUp’s APRs range wildly depending on how long your loan is and how much you borrow – anywhere between 291% to 1147%! Avant offers APRs much less than that, with a range of 9.95% – 35.99%.
A loan through Avant might look like this: a $5,700 loan with an administration fee of Up to 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.
An example loan from LendUp: a $200 loan with a term of 14 days, costing you $35.20 in interest – that’s an APR of 458.86%. (As of March 07, 2019)
If you’re looking for a small amount of cash to tide you over until your next paycheck, it makes sense to choose LendUp. If you’re looking for a much longer term, or for more money, then choose Avant. But carefully consider the fine print and interest rates before going with either lending option.
Don’t Use Either One For the Sole Purpose of Building Credit
As helpful as Avant and LendUp may be, they’re not your only options if you need to build credit, nor are they the best options out there.
From the example shown above, it’s clear that borrowing from LendUp comes with an additional cost due to the interest charged on the loan. Building credit and having to pay that interest isn’t worth it. Likewise, Avant doesn’t have the best interest rates out there for personal loans.
If you need to build your credit, you should look to opening a secured credit card instead. If you can qualify, store credit cards work as well. You want to make on small purchase a month and pay it off on time and in full to start with so you can prove you’re a responsible consumer.
By opening a credit card, you can pay on time and pay in full, and never have to pay interest.
When you take a loan, you’re going to be paying a decent amount in interest, which causes you to pay much more than the original loan amount you took out.
Is building your credit worth that cost? Not if you can get approved for a different solution.
You should only be taking these loans if you truly need the money. Don’t take them for the sake of building your credit unless you’ve exhausted all your other options.
The Fine Print
Make sure to read the fine print when it comes to hidden fees.
Depending on the state, Avant may charge a late fee of $25 when payments are past due for 10 days, and a dishonored payment fee of $15 if your money is returned unpaid. Both offer the option to enroll in automatic payments.
Depending on the state, LendUp charges between $15 and $30 for a returned payment.
Note that both lending options strongly encourage borrowers to call if they’re experiencing difficulty making a payment. Both lending platforms are willing to work with customers. Avant states it can offer a courtesy due date adjustment if needed, and it also has a Payment Planning Team dedicated to working with borrowers.
What about other fees? There are no prepayment fees with Avant. However, Avant does charge an origination fee. LendUp doesn’t charge an application fee either, but if you want to pay your loan before the due date, you’ll face extra charges to cover the cost of the transaction from using your debit card.
The Application Process
LendUp and Avant have simple online applications. You don’t have to worry about going through a mountain of paperwork like you would if you were applying for a traditional loan with a bank.
LendUp’s application process might be a bit quicker overall, because it offers instant and same-day funding options for borrowers (though same-day is only available to those with Wells Fargo bank accounts). Avant simply offers next business day funding if you’ve been approved by 4:30 central time, Monday through Friday.
Avant states that most of its customers have credit scores ranging from 600 to 750, so if you fall somewhere between that range, you have a better chance of being approved.
Of course, your credit score isn’t the sole determining factor for either of these companies. They’re looking to see whether or not you have the ability to pay based on your current financial situation.
As far as credit checks go, only conducts a soft inquiry on your credit report when you check your Loan Options.
LendUp offers a no credit check option for its payday loans. You’re eligible if you have an active bank account and can provide proof of income.
One big thing to note is that LendUp is currently only offered in select states (Ohio, New Mexico, Washington, Maine, Oklahoma, Louisiana, Florida, Texas, Wyoming, Alabama, Idaho, Indiana, Illinois, Mississippi, Oregon, Kansas, California, Missouri, Tennessee, and Minnesota), whereas Avant has a much wider offering. Avant is available in all states except Colorado, Iowa, West Virginia and Vermont.
Which Lending Option is Better?
Considering they’re both used for different purposes, we can’t say definitively which is better for you. It depends on your financial needs.
If you’re struggling to afford your bills or any other immediate needs, you might want to consider getting a loan from LendUp, if you can pay it off on time. LendUp does not allow rollovers at the end of your loan-term, which is a common debt trap with traditional payday lenders.
If you have loftier financial goals, such as wanting to make improvements around your home, needing help financing a car, or wanting extra breathing room in your wedding budget, then personal loans are the way to go. If you have better credit, we encourage you to look at the other personal loan lenders we’ve reviewed, as many of them offer better interest rates than Avant.
Always remember to shop around and see which lenders can offer you better rates. Many personal loan lenders only do soft inquires which won’t impact your credit score. If you shop around within a 30-day window, you’re inquiries will be grouped together, making less of an impact on your score.
How to Make Your Decision
If your main goal is to improve your credit score, try and get approved for a secured credit card instead. You won’t be stuck paying interest, and you’ll still reap the same credit-building rewards. If you’re hard-pressed for cash and don’t need a huge amount, then LendUp is a better solution than a typical payday loan lender. If you need more than a few hundred dollars to fund your goals, but don’t have the best credit, then consider applying for a personal loan through Avant.
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